Horse racing fans often lament its undeniable decline in popularity. It is commonplace to hear or read that the sport is moribund and that its fans are old and dying out. Some people decry the sparse coverage in the newspapers and on television.

My many years consulting for and researching troubled companies have taught me that virtually every such business thinks that the situation facing it is unusual if not unique. This is normally not the case at all and horse racing is no exception. Many old-line businesses and industries are coping with change.

The fact is, the United States has become a compartmentalized society aligned around specific and sometimes very narrow interests and this presents opportunities and challenges. The television networks have had their audiences carved up by cable channels and the Internet. The major newspapers are fighting for their lives in the face of the Internet. Major retailers have been eviscerated by specialty shops and online vendors and huge shopping malls often look deserted, not unlike Aqueduct on a cold Winter day. Even baseball, the reputed American national pastime, has valid concerns over the sport’s diminishing appeal to boys.

Like a multitude of mass-market enterprises, horse racing will never be what it once was. Executives in the horse racing industry must get over the past–it’s not coming back–and continue to take the steps necessary to survive and even prosper as a niche sport.

Horse racing is not an isolated case of a venerable institution fighting for a better future. Consider the state of NASCAR, golf, outdoor sports in general, newspapers, and sports writers, as discusssed below.

1. NASCAR is sometimes cited as a sport that horse racing should emulate. To be sure, the car racing that originated with drivers hauling bootleg whiskey in the South has grown into a blockbuster enterprise with the most television viewers among all sports except football. But the growth trend is faltering. Forbes magazine (March 2, 2009) ran an article titled “Pileup,” in which it said: “The sport is suffering declines in sponsorship, attendance, and financial stability, and the roots go a lot deeper than the lousy economy.” Consider the following facts and statistics from the Forbes article:

Between 1998 and 2005, NASCAR’s national television ratings outpaced every professional sport, growing by 180%. The National Football League’s TV ratings actually declined in the same time frame by 10%. From 2005 through 2008, NASCAR’s national television ratings decreased by 21%, whereas the National Football League ratings fell by 10%.

Advertising revenues have taken a hit-for example, by 16% in 2008 for NASCAR’s Sprint Cup circuit.

Track attendance declined in 2008 for the third year in a row from an average of 130,000 per race to 118,000. International Speedway Corporation cut admission prices for some of its seats by as much as 40% for the Daytona 500.

The way that NASCAR is structured, team owners are treated like third-class citizens, getting what is left after NASCAR and the drivers take their hefty cuts. Consequently, more and more racing teams are closing up shop or selling out, including NASCAR icon Richard Petty.

Finally, indications are that fans are increasingly bored with the action and are resisting the ticket prices.

This is a case-in-point that every product or service has a life cycle. While NASCAR is still producing attendance numbers and television ratings that are sensational, the sport is likely to be in the early phase of a downward trajectory, comparable perhaps to horse racing at the dawn of the television age in the early 1950s. Like horse racing, NASCAR will need to find ways to attract new fans and improve its core product in an era of tremendous competition for the entertainment dollar.

2. Another sport that has been experiencing a significant downturn in the United States is golf. More golf courses have been closing than opening in recent years. According to the New York Times, the sport has lost four million players (from 30 million to 26 million) since 2000. The percentage of avid golfers, who play at least 25 times a year, fell by a third. About one million golfers quit the game every year and fewer than that take it up. One of the main reasons offered is the cost of playing and the other is that people increasingly don’t have the time to spend on a golf course, and in particular married men with children. As a result, golf industry insiders have been experimenting with attracting high schoolers, families, and women. Golf is part of a general decline in participatory outdoor sports like tennis and snow skiing.

3. The Wall Street Journal (April 7, 2009) headline read: “Baseball Writers Brace for the End.” The article began with this verbiage: “Baseball’s independent press corps, once the most powerful in American sports, is fading. As newspapers cut budgets and payrolls, the press boxes at major league ballparks are becoming lonely places, signaling a future when some games may be chronicled only by wire services, house organs, and Web writers watching the games on television…It is not clear how many newpaper beat writers and columnists will vanish.”

Horse racing commentators and fans often bemoan the fact that racetrack beat writers and columnists are on the verge of extinction. That is true, but the ranks of sports beat writers per se are being thinned because of the winds of change that are taking their toll on print newspapers.

4. Any bricks-and-mortar business whose goods and services can be delivered over the Internet is in danger of being decimated if not completely destroyed. Take newspapers. Almost all major newspapers have announced staff cuts. The New York Times is $1.1 billion in debt and is trying to sell its stake in New England Sports Ventures (which owns the Boston Red Sox), as well as its corporate jet, to make it through 2009. It may also shutter its money-losing subsidiary the Boston Globe. Well-known newspapers have closed (the Rocky Mountain Daily News), some have gone strictly online (Seattle Post-Intelligencer), others have limited home delivery (the Detroit Free Press and the Detroit News) and a number have filed for bankruptcy (the Tribune Company-publisher of the Chicago Tribune, Los Angeles Times, and the Baltimore Sun). Similarly, Borders Group (book, music, and movie stores) and Blockbuster Inc. (movies and music) are hemorrhaging losses as online companies like Amazon and Netflix seize the market.

Like a wide variety of traditional bricks-and-mortar businesses in the early 21st century, racetracks’ future is online. Game, set, match, the Internet business model has prevailed. If the racing industry is going to grow handle, it will be largely through advance deposit wagering. That is the state of affairs and nothing can be done about it except to adapt.

In this regard, racetracks have a much better future than newspapers. The Internet is a made-to-order distribution channel for pari-mutuel wagering, whereas newspapers will have a difficult time making money from commodity-like online publications. Advance deposit wagering firms provide a convenient proprietary service that customers are willing to pay for through (reasonable) takeout, whereas newspapers supply information, most of which is readily available for free. However, a special-interest newspaper like the Daily Racing Form should do very well online because of the proprietary information it provides to handicappers.

5. On an unrelated topic, Horse Racing Business ran an article on March 7, 2009, titled “Halsey Minor for Racing’s Jobs.” It proposed that high-technology entrepreneur and longtime avid racing fan Halsey Minor would be good for the sport as a racetrack owner. An excerpt reads:

“If Minor joined up with some of the bright young minds in the industry to operate a racetrack, in the right location and under the right circumstances, the results might be highly desirable. With the bankruptcy filing at Magna Entertainment this week, a few prospects come to mind.”

Minor made an attempt to acquire a large stake in MEC in October of 2008 and has renewed his effort in the past several weeks. Now that MEC has filed Chapter 11 bankruptcy and major creditors are dissatisfied with the company’s reorganization plan, Minor’s chances have improved.

Minor is a technology innovator, has deep pockets, and is clearly a proponent of Thoroughbred horse racing. I repeat here what I said in the March 7th article: “The racing fraternity should embrace Minor with open arms, as a force for change and experimentation-a straw that stirs the drink.”

“You’ve got to accentuate the positive and eliminate the negative, latch on to the affirmative, don’t mess with Mister In-Between”

Johnny Mercer/Harold Arlen

On July 22, 1963, fearsome World’s Heavyweight Champion Charles “Sonny” Liston, an ex-con nicknamed “the Big Bear,” knocked out former champ Floyd Patterson in the first round to retain his title. The 2001 movie Ali, starring Will Smith as Muhammad Ali, depicts the brash 22-year-old former Olympic Gold Medalist boxer Cassius Marcellus Clay Jr., who later changed his name to Muhammad Ali, taunting the victorious Liston from ringside and challenging him to a title match. That part of the movie is fiction because Clay was watching the Liston-Patterson fight on a giant-screen, closed-circuit television broadcast at Freedom Hall arena in his hometown of Louisville, Kentucky, along with thousands of other fans who had paid dearly to get in, including Yours Truly, to see less than one-round of boxing.

On my way out of Freedom Hall, I was walking along with a friend in the flow of the chattering crowd when Clay suddenly appeared near me with an entourage and members of the media tagging along. Being a somewhat brash youngster myself, of about Clay’s age, I called out something like, “Hey Cassius, how are you going to fight Liston?” Always a consummate performer, the 6-foot-4-inch Clay approached me with alacrity, followed by a mass of people, and the show was on. In a state of feigned or real excitement, he began to shout what he intended to do to “that big ugly bear.” He pumped his right fist into his left hand and carried on for what seemed to be at least a couple of minutes, with me and the crowd laughing and encouraging the histrionics. The young Clay/Ali radiated the magnetism that made him a superstar and one of the world’s most recognizable persons, even today.

At the weigh-in for the first Liston-Clay match on February 25, 1964, in Miami Beach, Clay acted so bizarre and out-of-control that some observers, including a physician and apparently Liston himself, thought he was scared to death and/or mentally unhinged. That night, after evading the powerful Liston’s sizzling punches and surviving blinding linament in his eyes from contact with Liston’s gloves, the 8-1 underdog Clay won the title when Liston could not or would not answer the bell for the seventh round. Bedlam ensued and Clay wildly proclaimed “I am the greatest,” and “I am the prettiest.”

Ali grew up watching, on early television, a professional wrestler named Gorgeous George, who played a wretched villain so well that fans packed the arena to see him get his comeuppance. Ali shrewdly adapted George’s approach to entice paying customers, boost television ratings, and psyche opponents. In the Gorgeous George/Muhammad Ali school of thought, any publicity is good publicity, as long as it sells.

Maybe so for boxing, but certainly not for horse racing.

Yet in recent years, the publicity that Thoroughbred horse racing has received has been more bad than good. What’s worse, racing has tended to exacerbate the problem. How so? Whenever the sport has experienced low points like the tragedies of Barbaro and Eight Belles, it has overreacted and overcompensated, to its detriment. In its zeal to “show it cares,” racing has unintentionally shone the spotlight on the sport’s vulnerabilities.

Here are some recent cases in point of how the racing industry is its own worst enemy in disseminating images and words for public consumption.

The general public is, of course, most aware of horse racing in the United States during the five weeks of the Triple Crown. Many people who never watch another horse race all year, tune in the Kentucky Derby. Thus the telecasts of the Kentucky Derby, the Preakness, and the Belmont Stakes, provide a very limited window of opportunity for racing to present itself in the best light to a large audience of casual viewers who know little or nothing about the sport. Typically, each telecast tries to build up to the actual race through feel-good human-interest stories.

Some of these glimpses are beneficial to the sport of racing. Two, for instance, that come to mind are the tie-in between Afleet Alex and Alex’s Lemonade Stand in 2005 and the explanation of how Colonel John got his name in 2008. But occasionally, one wonders what the producers were thinking. In 2008, the Kentucky Derby telecast had a vignette that amounted to regaling an international audience with a soap opera. We were told about a horse trainer whose tale of woe and redemption involved: a badly broken man-woman relationship, substance abuse by the couple, the effects on their innocent young daughter, and the murder of the mother by a drug dealer. Almost everyone appreciates redemption, but is this really the story the racing industry should be telling to a worldwide audience on the sport’s showcase day in America? Especially a story that reinforces preexisting impressions of racing’s seamier side. To compound matters, the subject trainer also had a history of medication rules violations with his horses and his Muhammad Ali-like bragging on his own colt and trashing of his colt’s competitors were unflattering.

In the past several years, the racing fraternity has rightfully been distraught over the tragic injuries to Barbaro in the Preakness, George Washington in the Breeders’ Cup Classic, and Eight Belles in the Kentucky Derby. As a consequence, the industry has been proactive in such important areas as banning medication, improving track surfaces, outlawing toe grabs, and assessing the effects of inbreeding and line breeding on durability.

However, the industry, through its Eclipse Media Awards, keeps rewarding people for writing articles and doing television reports on the very subjects that have posed a public relations nightmare. Consider a sampling of titles and subject matter of some of the winning entries in the past three years:

2006: “Barbaro” (an HBO national television feature about the colt and his breakdown).

2006: “A Nightmare Right from the Start” (a newspaper article in a three-part series on the Barbaro injury and surgery. Honorable Mention also went to an article on Barbaro).

2006: “Man Whose Job is Saving Barbaro” (a newspaper article).

2007: “Death and Durability of the Racehorse” (a three-part newspaper series on racehorse injuries).

2008: “Tragedy on the Track ” (the winner in the Audio and Multi-Media Internet category).

Unquestionably, these were interesting and well-crafted contributions by talented writers and producers. But why so many awards to a theme that dwells on the most negative aspects of racing? Why some of the titles that are self-indicting and convey mea culpa? Tell people the bad about racing over and over and over and they believe it, like Pavlov’s dog learned to salivate to a ringing bell. Wouldn’t one or maybe two awards on the topic of breakdowns have served the purpose?

If you demur, ponder the following questions:

Were the 2009 Super Bowl champion Pittsburgh Steelers to return to the Super Bowl next year, would the National Football League allow the game’s telecast to delve into how the 2009 Super Bowl MVP, the Steelers’ Santonio Holmes, has a background encompassing marijuana sales and possession, domestic violence, and assault?

If the NFL had an equivalent to the Media Eclipse Awards, would the League office sanction an award being given for an article or television program titled “Crippling Injuries and Paralysis on the Gridiron” –dealing with collisions that turned players into paraplegics and quadriplegics?

Would Major League Baseball allow the World Series telecast to explore steroid use by players from the present and past?

Would the National Basketball Association permit announcers to examine, during game 7 of the League championship, the recent case of the NBA referee who was allegedly on the take from gangsters?

Am I suggesting censorship? Yes, absolutely, but call it brand management–always be prudent in what you say and convey about yourself and your product offerings and never intentionally weaken brand equity.

The racing industry is under no free-speech obligation to provide “fair and balanced” treatment in its own radio and television programs and in the awards it hands out. There is enough public-relations fallout from newspaper writers who equate horse racing with dog fighting, television commentators who zero in on catastrophic breakdowns, and so on ad infinitum, without the industry piling on. For instance, yesterday’s Wall Street Journal began its otherwise favorable review of the television show “Jockeys” with a gratuitous aside: “…the new reality series filmed in part at Santa Anita track near Los Angeles does not, cannot, show the darkest underbelly of the horse-racing world…”

Racing needs to do a much better job of oversight in what is said on the telecasts it is involved with, in formulating specific criteria for its Eclipse Awards, and generally in presenting the sport in a positive way. This is not to suggest that subjects like drugs, injuries, and breakdowns should not be broached; dispassionate factual reports, without sensationalized titles and content, are necessary and useful in telling the public what steps racing is taking to correct its shortcomings.

In the wake of the Eight Belles’ fatality, Steve Crist of the Daily Racing Form rationally pointed out that a breakdown had not occurred in the Kentucky Derby since about 75 years ago. This statistic does not make the pain any easier, but it does put things in perspective for the public to evaluate.

Effective public relations avoids giving someone with malice the figurative rope by which to hang you. Accentuate the positive and work to eliminate the negative by improving track safety, coming down hard on drugs… Then put your best foot forward in communicating to the public.